Top 10 Tips for Maximising your R&D Tax Credits Claim
The R&D Tax Credits claims we’ve built have pumped literally tens of millions of pounds back into British companies so far. Here, RIFT’s Director of R&D Sarah Collins takes you through our top 10 tips for making the most of your R&D claim.
RIFT Research & Development has helped hundreds of the UK’s most innovative businesses to make their biggest ideas pay off. An R&D tax relief claim isn’t some minor windfall or random lottery win. This is money that your innovations have earned you, and it’s heart-breaking to see so many forward-thinking firms still missing out on the largest reward and incentive scheme of its kind. Here, RIFT’s Head of R&D Sarah Collins takes you through our top 10 tips for making the most of your R&D claim:
1) Understand what R&D means for your industry
There’s a persistent stereotype around R&D, and it needs to be debunked. When we talk about innovation, we mean a whole lot more than lab coats and test tubes. So many businesses lose out on valuable claims because they assume that they aren’t eligible. The truth is, a lot of what you might simply consider your day-to-day business as usual could qualify for R&D Tax Credits. When you’re solving problems and pushing back boundaries, RIFT is right by your side to help unlock the real value of your work, from routine operations to subcontractor invoices. Qualifying R&D work is easily overlooked when you’ve got your eyes set on the future of your business. RIFT will make sure you never miss what’s right under your nose.
2) Raise awareness in your ranks
It’s one thing for the top tiers of your business to understand the importance and practical value of R&D work. However, a great deal of that work is actually going on “in the trenches”. We often find that, the closer you get to the real action, the less awareness there is of what R&D is actually worth. Again, when resolving uncertainty is just part of your job description, it’s all too easy to lose sight of its value. The key to maximising an R&D claim is recognising where R&D is taking place throughout your entire organisation’s structure.
3) Know your projects
A related, but no less critical, point is that you’ve really got to understand your projects and activities to see where they might qualify for an R&D Tax Credits claim. It’s the nature of problem solving that you won’t always know in advance what challenges you’ll be facing. You’ve got to train yourself to spot R&D as and when it takes place in your business. You also need to get used to keeping solid records of your projects in order to make the most of your claims, even (and especially) when you’ve had to do your R&D “on the fly”.
4) Share your information
If you’re doing work that could qualify for R&D Tax Credits, you’ve got to get your heads together. Regular meetings are a must, so that your left hand always knows what your right hand’s doing – and how deeply it’s been digging into your pockets to do it. It makes no difference what industry you’re in. From R&D in construction to software engineering, it’s critical that you keep the information flowing throughout your company. That’s the only way to make sure you recognise and understand where your qualifying R&D activity is taking place.
5) Work in real time
There are many ways of capturing and handling the information involved in an R&D Tax Credits claim. What works for one business may not for another, so you really have to find the most efficient methods for the way you’re set up. RIFT will show you how to pin down the best system for your organisation, and how to keep it running smoothly and effectively with the least disruption. Depending on your organisation and needs, this could mean:
- Diary entries.
- Regular meetings.
- Associated minutes.
6) Pinpoint qualifying costs in subcontracted work
Subcontracted work is an area where a lot of R&D claims start bleeding out money that should have gone back into their businesses. If you use subcontractors, you need to highlight the invoices where some qualifying R&D activity took place. This is tricky for many businesses, particularly if they use subcontractors more extensively and for more than just R&D work. You won’t be able to claim tax relief on the entire costs of these invoices, since there’s a cap of 65%, but it’s still a vital area to include when you’re looking to maximise your claim.
7) Consider material costs
R&D Tax Credits claims are difficult to put together well, which is why certain areas are often overlooked. Basically every innovative business will have some R&D costs related to materials, and it can be very complicated to work out which of them are eligible for tax relief. A couple of good examples might be the costs you’ve run up in the prototyping stage or materials you’ve used up in projects that didn’t eventually come to fruition. These can all still have a valuable part to play in a well constructed R&D claim.
8) Learn to use your existing systems more proactively
Get to know the ins and outs of your accounting software. A lot of these systems are set up to enable you to identify R&D projects separately from your everyday work. This can be extremely useful when it comes to filing your yearly R&D Tax Credits claim – but keep in mind that you do still have to avoid the damaging mindset of “if it’s routine, it can’t be R&D” that blunts so many promising claims.
9) Track your tenders
When you’ve put in a pitch to tender for a contract or piece of work, it’s not uncommon for a little R&D legwork to be involved. R&D tax credits are about rewarding the kind of activity that stands to benefit more than just your own business, so even failed tenders can bring rewards under the scheme. Remember, even if your R&D never comes to fruition, it can still be valuable to your business, your sector and beyond. Never just write off this kind of work as “failed”. That’s a common mistake, and one that sees many businesses losing out on an important part of their R&D claims.
10) Call the experts
Probably the most important tip on the list is always to get expert, specialist advice when you’re making an R&D Tax Credits claim. Putting an R&D claim together can be complex and time-consuming, drawing you away from the critical job of running your business. Let us shoulder the load and get you get the credit your innovations deserve.
Our RIFT R&D team can help you bank on your innovation to ensure you're maximising your entitlement through the UK's research & development tax relief scheme. From assessing what R&D costs qualify to helping you understand the process of making an R&D claim, our experts can piece together the R&D jigsaw allowing you reap the rewards while focussing on the day-to-day running of the business.